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tv   Closing Bell With Maria Bartiromo  CNBC  June 14, 2012 4:00pm-5:00pm EDT

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well. bobly see you later. we come to the close of another wild whacky final hour of the trading day, and there is more to come in the second hour of the "closing bell." welcome back to "closing bell". i'm filling in for maria bartiromo. stocks are spiking in the last hour. there are reports of coordinations action from the central banks for liquidity after the weekend if need be. the dow was up at one poin by 202 points, but what we have is enough to help raise losses for the week.
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so coming up we have full team coverage of this rally, and what that action could mean for the markets and most importantly for your money as well. >> all right, here is where we stand at the moment. these are near final figures as they are putting the final trades to bed here. the dow up 154 points. we were lower on the opening this morning. after the word from the central banks it went up. the nasdaq turned negative going into the final hour and then popped on all of this. theup up 13 points. so a wild day on wall street again. let's get more of what happened. let's get hits, runs, and errors. >> all of the action was in the last hour.
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there was hoping all throughout the morning of additional qe 3 or operation twist. anything hopes that the probailout party would win in greece. the bottom line is this. still, the global solution is lower debt and restructuring of the european economy. >> steve leisman working the phones, what can you tell us? >> this is the governor's bank of england saying the case of further monetary stimulus is mounting. he is saying a black cloud of uncertainty is over the u.k. economy. the case for further monetary easing is growing. this is not about that coordinated action that osborn spoke about, but it's in line
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with that idea that something is coming from the bank of england. i reached a dead end now about whether or not the from treasury would be part of this. they said in the event of market volatility, they would step in to provide additional liquidity, but thaw is not a comment on the current situation, that's what they generally said in the past. so. >> so what they're saying is the case is growing, is he referring to himself, or is he saying there will be monetary easing around the world? >> you're right, this is two separate comments. you had the osborn's say they would coordinate action with the bank of england. this is the bank of england saying there is a good cause for action that would go beyond the issue of immediately quid tear
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issues. additional purchases or lower rates. >> david, i know your cautiously optimistic anyway, what do you make of these and what does it do to your investment strategy? >> it suggest there will be more monetary easing including the federal reserve board, and that stocks have probably bottomed. they're about 5% higher than the june 4th lows, but it doesn't mean it will be a good one way direction in the last few months. we'll see monetary easing, until we get more clarity there, stocks will simply have to grind forward on low valuations. that's important to the market but we need to see a fiscal remedy to what we're going to get otherwise come january 1st. >> isn't it the law of diminishing returns? isn't it like a drop in the
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ocean? >> what you're seeing is the self life of monetary policy expansion is getting shorter and shorter. it's not really making as significant of a longer term impact because monetary policy doesn't solve the fiscal solvency -- >> sorry to cut you off, we have news from steve leisman. >> japan saying they will act on the yen if needed. they're expressing concerns over the strong yen, and asked for european officials to take decisive actions, but i think what we're talking about here is we will act on the yen if needed. >> they have been saying this for weeks, the finance minister saying he feeling the yen is bad for the jab news economy. is there anything here to suggest that some kind of action is eminent? >> what i would do,man i did, is
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take this in context of the news we have been reporting. you have to story on the g 20 officials. additional comments from king, and it appears if there is talk of coordinated action now. >> it's all happening now, rick santelli, you have some back channel discussions going on and there is obviously major concern about the impact the elections would have on the greek markets. >> yeah, i'm getting different e-mails. i walk away with the same thoughts many traders here are discussing. just the volatility of this election in the weekend is making bankers nervous, but the chapter of if you give liquidity or not, the long-term probabilities of bad numbers for
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a long time out of europe are exciting the other set of central bank responses which is everybody is trying to weaken their currency. trying to do some type of easing to help their economies, and i hate to bring it up, but it mirrors a lot of activities we saw in the '30s. where will the growth come from? and then you have the near-term question of seizing up for the markets based on the contemporary news. >> i don't want to be rude, but i want to give you information from king who talking about a specific plan here says the government will launch long-term funding schemes for banks in the next few weeks. below market rates against collateral that include real economy loans. it sounds like a discount window. it will activate collateral term repo facility and they will have a six month maturity. so we're hearing a specific plan
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and this is the coordination i believe that osborn was talking about. >> david, from an investor point of view, if we see coordinated central bank action? what does that mean about the flow of money? >> i think the u.s. is still the best play to be especially in 2011 with uncertainty in europe and slowing in asia. and you want to find companies growing their dividends. that's double the rate of earnings. names like cvs, qualcom. the real gem there is the qvc business. and i think you have good cash flow and dive dent growth, and there's an opportunity to look at this market having bottomed and where it will grind forward.
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>> ben, we have many miles to go before we get to this. but the federal reserve, i mean, if they don't do anything next week, there are apparently high expectations of extending the liquidity program or whatever. if that doesn't happen, what happens to our markets here? >> i would like to lean away from excessive monetary policy. but in this kind of volatility, it looks like the fed will have to stay as easy as they are. they can't get tighter here, so maybe reupping the twist program will make sense. a balance sheet expansion with the slow growth we're seeing is another story. >> there are expectations that the fed will nod to some kind of easing or stimulus. and i think the market will be
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disappointed if they don't hear anything. >> thank you for being with us. >> got our heads in the punch bowl. >> thank you, a flurry of reports on the euro zone reports. we are in athens with the latest, but all of the action seems to be happening away from there ironically. >> but it's occurring because they're frightens of what could happen in athens this weekend. steve has brought headline after headline. at a minimum they're doing coordinated job boning. they are accepting the type of collateral that they did not suspect before. are they going to vote for a party that is supportive of the bailout and will stick with the
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austerity measures or will they vote for a 37-year-old upstart, communityist and socialist that campaigned on the notion that he can renegotiate this bail out. the financial leaders are so frightened that he can get more out of them. he wants to rescind a lot of the tough bailout agreements off austerity issues. he wants to raise salaries, restore collective bargaining, and he wants to do a lot of things they have been trying to dismantle throughout year. we could see markets plummet on monday if they vote for him. if they do not we could see markets rally on monday but we could see rallying on the streets here. >> great job as always, thanks. straight from ringing the
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closing bell, celebrating the army's birthday. fantastic to have you with us, happy birthday. >> tell us about some of the celebrations planned to celebration the 237th anniversary. >> across the country this week we're celebrating the army and everything that's been accomplished. and reaching out across the country and today was a big day in new york. we did several events here and at the stock exchange and other places. it's important for us to reach out to the people of the united states. they're the ones who help us, support us, and we're there for them. as we were talking earlier, this is part of what we are for, our freedom and liberty to have a capitalist system that allows us to move forward as a country. so for me it's very appropriate that we're here. >> we're here for you and you're here for us as well. it's a mutual thing.
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>> it's not like this every day, but it's exciting today. >> hopefully the futures for the army are up. general, we thank you for your service, happy anniversary. thank you for joining us today. >> thanks for coming in. >> all right, where were we now? wild swings in the final hour of trade. should you be investing right now with so much market uncertainty? later on, he overseas over $200 billion in at sets. joe deer will tell us how he is managing the biggest pension fund in the united states.
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trying to make sense of a another volatile hour of trading. this is a joy for me because ordinarily i would rush to by blackberry to read your block about what's going on right now.
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what do you think about the impact you could have as a result of the greek elections over the weekend. >> i think they're worried about bank runs. you could get massive bank runs more than with have ever seen in greece, and we could get some maybe in spain. in a sense, central banks want to provide liquidity if that occurs. we're going into a strange dangerous weekend. and central banks want, from a liquidity standpoint, be there ready to provide it if needed. all of a sudden it flairs back up again. >> even if we do not get good news from the euro zone, or they take action, what's the end game. >> there's two questions there. the first with respect to
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liquidity, and let's be clear. central banks, based on what we're hearing do not provide accommodated policy or easing. they're just willing to provide a backstop incase things tighten up. but to echo what peter said, if they did provide liquidity, there is nothing to say it would not overwhelm. it is not the decision it they leave or not. even if new democracy, and the probailout party wins, the elections that ensue will be more important than the results. >> do you think they should leave? >> i could make a strong case that it's about time to at least default or leave the euro zone. it comes with an extraordinary short-term price, but we have evidence that in a three to even
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year time period greece would on a 50/50 basis. >> this is a global issue, you heard not only about the possibility of european central banks but the bank of england weighed in, and the bank of japan has now too. >> ben bernanke has not been quiet. that's all the central bankers know is to flood the world with money to try to fix this. the tenure is well below 2%, mortgage rates are at historic lows. what they do now is historic. the way they will have a substantial impact on things and they have to do that in a bigger and bigger way. i guarantee it will do nothing outside of an initial hiccup or initial excitement with asset prices.
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>> if that is the case then, peter, how disappointed will the markets be? >> we're seeing the law of demolishing returns. and every time they want to turn over that hourglass, it's running out of sand. >> if i could jump in quick, are respect to the concept of the law of diminishing return. i agree with peter's point that you do need more and more so to speak, if we could make a drug analogy here. but, it's not really about the law of diminishing return so much as it is about conditions generally. in contrast at qe 1 where questions were darn near close to perfect for a credit easing style program, right now what ails the economy is not going to necessarily be by lower interest rates. so it's more of a shift in the
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landscape. >> i thought it was an earthquake, it's just going on elsewhere around the world. thank you for your insights. we're finishing up 155 points. >> yes, the dow surged up in just a matter of minutes. how is the chief investment officer of the largest u.s. pension fund navigating the swings. he'll join us coming up. >> and he is in charge of more than $200 billion in assets. stick around.
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if you're just joining us, you missed a lot in the last hour or so. it was a very volatile hour. the do you was up about 70 points, and almost immediately the markets took off on the word from an unknown g 20 source that said central banks were talking about a coordinated every to backstop banks in the wake of the elections over the weekend. the elections critical to the future of greece remaining in the euro zone. we heard from the bank of england and japan and we had record volatility. >> the do you was up 2020 points, the nasdaq up 23, and
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the s&p at it's highs. steve leisman, we keep hearing from people saying the central banks are just reminds us of what they would be doing anyway if it's necessary. >> i think that's a piece of it, we're hearing more proactive discussion here. especially to me. the governor of the bank of england making comments about policy that's will come from the bank. osborn saying he will coordinate these actions with the bank of england. that's a different thing from saying hey, if there is a problem we will provide liquidity. we have a canadian government official says canada is ready to act, and that government official saying the world needs to prepare for the greek elections. that suggest there is
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discussions going on. at the moment what stands out is the lack of comment from the ecb and the federal reserve. they might be quite happy to see other central banks taking action believing it has done quite a bit and others have not. >> as we have been points out, our markets are doing the work on the fed by keeping loan rates as low as they are right now. >> treasury rates crept up a bit, but i'm glad steve brought up canada, to see all of this action, volatility, and equities is very telling to me. >> what does it say? >> treasury sees there will be a lot of possible negative issues filled with volatility and anxie anxiety. they have it right. that's what they've been saying all along. the equity market gets pulled many how it benefits from some
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of these measures, but there is another point. they are directing plans that have been written already. you have other central banks joining the ecb, cheerleading like we're all in it together, and there is the dynamic to run back to their own corner as well. >> the central bankers, and mr. king, for instance, are trying to do a little hand holding. i heard from a trader shades of '08. that's what everybody is afraid of and watching, that sort of event or period and they don't want to go through it again. so the banks and officials making comments are trying to prevent runs on banks that feel as though after the election in greece this weekend things will
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be dramatically different. >> and we're seeing them being taken out of major banks in greece. my question to you, rick, you hinted at this. who has it right the bond market or the equity market? bond market because no matter what happens with stabilization, all of the effort of all of these liquidity, what we will be left with are many, many, many we'res of res deuced global growth. i think that is what credit markets have been fixated on. you will be left with countries with touch debt and no way to pay it back, how could that give us good numbers any time soon. >> but to steve's point, the fact that the bank of england came out with statements about what they would do or might do, does that put pressure on some of the other bankers around the
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world to be more definitive or not? >> i'm putting pressure on other banks around the world. bill told this next story, or mandy, talking about preparing the markets for the weekend. if that's what they really want today do, then the one person that had the institution that has to step up is the european central bank. a comment like that would be definitive. at this point and throughout this christ, they always looked to the european central bank to do more, and that has generally helped the markets so far. they're not saying anything. we have yet to hear anything from the u.s. federal reserve which you would think if there was coordinated action -- i reported half a dozen of these when they do these things, mandy and bill, they come up and say the banks of england, canada, japan, the united states say the following and they put out a press release, and the markets
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tend to go up on that. >> it is dribbling out. i wonder if they wake up in australia and throw their hat into the ring as well. >> i'm sure they will. >> it is not particularly sunny this year for the california public employee retirement system. they are down this year. joe deer is coming up next with his strategy to turn that around and guide us through these rocky investment waters. later, did the auto industry bailout cost taxpayers billions more than it should have? a next guest saying yes. we'll get the other side of that as well.
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possible coordinated actions to provide liquidity. we thought we had the markets figured there, bob. >> first we were up early on on hopes for a qe 3 and a better outcome for the elections. look at the dow industrials. we got rumors of coordinated central bank intervention, and about a $100 billion support plan for the u.k. economy. you see it off of the highs, volume on the tv side. energy stocks, materials, look at the materials. these were all starting to slide, and these were much more stable in the last few days. materials went negative. same with energy, a horrible two months in may and april. very much more stable in the last few days, you can see it too, rallied. the one stock that didn't do much today, apple doesn't have
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much energy anymore. >> that's for sure. thank you very much. reports out of the euro zone sparked action today, and today president obama and mitt romney gave dualing speeches on the economy in ohio. we have some highlights on that. >> if you didn't this ohio would be important to this campaign, you learned that today. both president obama and mitt romney gave speeches today. neither afraid of taking a shot at another candidate. starting off with machinery that explained what was going on with this intrastate rivalry. >> you may have heard that president obama is on the other side of the state and he is going to be delivering a speech on the economy.
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he is doing that because he has not delivered a recovery for the economy. meanwhile, president obama also giving a speech on the economy in ohio and billion, framing this as a battle for the future of the economy and making a stark contrast between his policies and those of machineit romney, listen to that as well. >> they're policies did not grow the economy. they did not grow the middle class. they did not reduce our debt. why would we think that they would work better this time? >> interestingly, barack obama did make an oblique reference to his gaffe of last week when he suggested that the private sector was doing just fine. he said that wasn't the first gaffe he made and it probably won't be the last one during this campaign. but he urged supporters to think about the economy and the future and not the distractions of the
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daily campaign. >> no doubt. still more to come on that i'm sure, thanks very much. no coincidence that the president and governor romney are in ohio as they tout their economic plans. ohio a key state from the u.s. automotive industry. president obama using the auto bailout as proof that his policies are working. but an op-ed piece in today's "wall street journal" claimed the bailout cost taxpayers more than $23 billion more dollars than if they went through normal bankruptcy proceedings. former economic policy advisor to joe biden does not green. james, explain your stance on this. >> what we found is the entire net cost of the auto bail out, $23 billion according to the estimates, are giving to them to
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prop up their compensation. if the administration provided bankruptcy financing to get the auto makers running. money they weren't legally entitled to, then the taxpayers would have broken even. he could have kept the companies running without losing any money. >> i was there at the time and there was no private sector funding available. had we not gone the restructuring that we did, and i found interesting things in james's report. the auto try added more than 200,000 jobs since the rescue. and if you just plot a graph where the rescue occurred, you can see all of that came right after wards and he mentioned the fact that gm for the first time
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since 2008, the global leader in sales. i also see, and this was -- >> one thing. here is a oversight in your report. what i didn't see is all of the concessions that they made. >> he is suggesting the ends justify the means, no? >> obama could have limited himself to providing bankruptcy financing and kept the auto makers going. what he did was transfer $26 billion to the united auto workers to their benefit funds and into them making concessions. yes, the union made huge concessions for new hires, those not members of the union yet, but as steve ratner admitted, it didn't require any of the existing union members to take a pay cut and that was a mistake. why should everyone have to pay for this? >> you have a point there
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vis-a-vis the existing workers, but the retirees took a wac on health care and pension, and they made concessions as well. for instance, no more automatic wage increases, and they agreed not to strike until 2015. that's a union making a big concession. don't forget the creditors at gm. i think you're being a little chery picky there. >> you look at the unsecured creditors at crystler, they have nothing. and the union ended up in total of $26 billion in subsidies. more than the whole budget went to worker who is make device the average. >> the unsecured creditors did not get nothing, they got preferred stock and warrants. but here is the thing. here is the thing -- you know, an unsecured creditor in a
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bankruptcy, and the unions were just another unsecured creditor, i know you will agree with that. it's up to the bankruptcy court to decide how to divide the pain. at the time, at the time and i think it's a reasonable decision, we decided that the existing workers should take the kind of hit they took, and get the kind of benefits they took. >> we have to leave it there, great debate, guys. >> and the discussion will continue for years to come i'm sure. thank you both. fasten your seat belts, tomorrow could be another volatile day of trading. >> you have options, expirations, upcoming greek election on sunday, we will break down everything you need to know to make money in this p.rket, that's coming up.
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so another wild last hour an a wild day on what's been a wild
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week. we're not finished yet. tomorrow we could see even more action. with 30 seconds on the clock our next guests will tell us why they think -- what will move the markets and which direction may may go. >> on the clock, stifel nicolaus' chad, confer security's, rick. chad, we're going to begin with you. the clock is starting. 30 seconds. tell us what's the important thing to know? >> tomorrow's trade is all about portfolio managers and traders squaring their book. we're going into the greek election. once you consider that that is going to be the whole story for tomorrow into monday. if you get economic data points tomorrow, that point in a negative territory, then it's going to add air cover for the federal reserve to do more qe in the coming weeks. now, if it's a bad situation in greece and bad outcome, look at the 1290 200-day moving average as support. >> okay. very good. that was 30 seconds. >> that was it. believe it or not. time flies here.
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john, what's important for you tomorrow? >> well, tonight we're going to watch the boj to see if they're going to do anything in terms of qe. they have their meeting tonight. last night south korea said they were going to increase their amount of pension activity into stocks and equities throughout the globe. those are two things we're watching tonight as we go home. obviously the euro 2012 is on. we're going to be watching that. on the other side of the globe, tomorrow, watching the greek bank stocks to see how they're reacting. if there are any internal pulls coming out of greece that tells us how the election's going. tomorrow we have the s&p rebalancing, then we're also watching what we could find out out of washington in terms of the supreme court. >> rick, hard to be the third one because it's all been said. anything different you're seeing on your radar screen? >> we'll be watching economic numbers as everybody's saying. university of michigan is a big deal tomorrow, preliminary number, should give us guidance. obviously option expiration, institutions will be in kprol f control for the day and move equity throughout the system.
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most importantly we're watching crude oil, crude oil and u.s. equity markets correlated and if you watch crude close at $230 get a look at the way equity markets are going to close and position yourself accordingly. >> of course, opec maintained production schedules where they are right now. so oil was generally higher today. we'll watch that for tomorrow. >> headline kind of got lost in everything else, didn't they? >> yes. we should have gotten to otherwise in a normal day. it was anything but a normal day. gentlemen, thank you. see you later. >> indeed, what a day. stocks spiked, dollar swoons, bond jumps yield in the final hour of trade. >> mandy and i will try to put it into perfective and set you up for what could be another wild session tomorrow. stay tuned.
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customers didn't like it. so why do banks do it ? hello ? hello ?! if your bank doesn't let you talk to a real person 24/7, you need an ally. hello ? ally bank. no nonsense. just people sense. all right. all right. couple minutes left here for us. bring santelli and liesman back for final thoughts. although this story is far from over here, steve liesman. >> i think that's right, bill. and i have to say, i'm starting to be skeptical again of this story. i know i started off that way and changed my mind when i heard from the bank of england.
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but we've looked into this speech by mervyn king, bill, a planned speech i think happens every year. and there was a lot of talk, rick, correct me if i'm wrong here, that england needed to do something. and this may be completely separate from any coordinated action. i would just say, bill, one thing i think i know about central banks is that finance officials don't speak for them and so far we have the bank of england talking on the one hand and finance officials on the other. so i have my doubts. look, we could come in tomorrow morning. there could be a coordinated statement. maybe this g-20 official picked up on the chatter among them. so far the central banks have shown through the crisis -- >> to you thido you think geith aware this would happen when he made the comments about europe? >> i can never, ever speak about what geithner is aware of not aware of. they go to the


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